Shares of online fast-fashion retailer Shein fell more than 3% in early trading on Wednesday, a day after a weak debut on the Hong Kong stock exchange following its long-awaited initial public offering.
The stock dropped as much as 10% on Tuesday before recovering to close near its HK$48.56 issue price. Shein shares were trading at around HK$46.94 early on Wednesday, while Hong Kong's Hang Seng Index was down about 0.9%.
According to Reuters, Shein's late-session recovery on Tuesday was aided by stabilisation measures that can be used in large listings to limit sharp declines on the debut day. A source and analysts cited by Reuters said such measures helped support the stock after its initial fall.
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Shein raised $1.7 billion through the IPO, giving the company a valuation of $26.5 billion. That is nearly a quarter of its peak valuation of almost $100 billion reached in 2022.
The subdued market debut highlights rising concerns over Shein's growth outlook. Higher import duties in major markets, increasing regulatory scrutiny and intensifying competition are creating challenges for the retailer, the report stated.
Revenue growth has slowed in recent years, while pressure on margins has increased. Higher tariffs and customs-related costs in the United States and European Union are also weighing on the economics of Shein's low-cost, cross-border business model, according to analysts cited by Reuters.
Shein's weaker listing performance comes as investors reassess the valuation and growth potential of a company that once ranked among the world's most highly valued private startups. The company's ability to navigate regulatory changes, trade barriers and rising competition is likely to remain a key focus for investors following its Hong Kong listing.
